Glossary
of Health Insurance Terms

agent - a licensed individual who represents several
insurance companies and sells their products.

benefit - reimbursement for covered medical expenses as
specified by the plan.

brand-name drug - prescription drug which is marketed with
a specific brand name by the company that manufactures it. May cost
insured individuals a higher co-pay than generic drugs on some
health plans. (see "generic.")

broker - a licensed insurance professional who obtains
multiple quotes and plan information in the interest of his client.

carrier - insurance company or HMO insuring the health
plan.

Certificate Booklet - the plan agreement. A printed
description of the benefits and coverage provisions intended to
explain the contractual arrangement between the carrier and the
insured group or individual. May also be referred to as a policy
booklet.

claim - a formal request made by an insured person for the
benefits provided by a policy.

COBRA (Consolidated Omnibus Budget Reconciliation Act) -
Federal legislation that requires group health plans to provide
health plan members the opportunity to purchase continued coverage
in the event their insurance is terminated. Applies only to employer
groups with 20 or more employees. Learn more about COBRA
at the Department of Labor's website. - Please note this may
take a few minutes to appear.

co-insurance - the percentage of covered expenses an
insured individual shares with the carrier. (i.e., for an 80/20
plan, the health plan member's co-insurance is 20%.) If applicable,
co-insurance applies after the insured pays the deductible and is
only required up to the plan's stop loss amount. (see "stop
loss.")

co-pay/co-payment - the amount an insured individual must
pay toward the cost of a particular benefit. For example, a plan
might require a $10 co-pay for each doctor's office visit.

credit for prior coverage - any pre-existing condition
waiting period met under an employer's prior (qualifying) coverage
will be credited to the current plan, if any interruption of
coverage between the new and prior plans meets state guidelines.

deductible - the dollar amount an insured individual must
pay for covered expenses during a calendar year before the plan
begins paying co-insurance benefits.

dependents - usually the spouse and unmarried children
(adopted, step or natural) of an employee.

effective date - the date requested by an employer for
insurance coverage to begin.

exclusions - expenses which are not covered under an
insurance plan. These are listed in the Certificate Booklet/Policy.

Explanation of Benefits (EOB) - a carrier's written
response to a claim for benefits. Sometimes accompanied by a
benefits check.

Generic drug ­ the chemical equivalent to a "brand
name drug." These drugs cost less, and the savings is passed
onto health plan members in the form of a lower co-pay.

group insurance - an insurance contract made with an
employer or other entity that covers individuals in the group.

Health Maintenance Organization (HMO) - An alternative to
commercial insurance that stresses preventive care, early diagnosis
and treatment on an outpatient basis. HMOs are licensed by the state
to provide care for enrollees by contracting with specific health
care providers to provide specified benefits. Many HMOs require
enrollees to see a particular primary care physician (PCP) who will
refer them to a specialist if deemed necessary.

HIPAA - Health Insurance Portability and Accountability
Act of 1996, P.L. 104-91. This law relates to underwriting,
pre-existing limitations, guaranteed renewal, COBRA and
certification requirements in the event someone terminates from the
plan. The new law, commonly known as the "Kennedy-Kassebaum
Bill," establishes new requirements for self-funded,
fully-insured group plans (including church plans) and Individual
Health policies. The purpose of the law is to:

Improve portability and continuity of health insurance
coverage in the group and individual markets

To combat waste, fraud and abuse in health insurance and
health care delivery

To promote the use of medical savings accounts

To improve access to long-term care services and coverage

To simplify the administration of health insurance

Learn more about HIPAA
at the Department of Labor's website. - Please note this may
take a few minutes to appear.

pre-certification - an insurance company requirement that
an insured obtain pre-approval before being admitted to a hospital
or receiving certain kinds of treatment.

ID card/identification card - card given to insured
individuals which advises medical providers that a patient is
covered by a particular health insurance plan.

indemnity insurance plans - traditional insurance plans
(not HMOs or PPOs) which permit insured individuals to choose their
doctors and hospitals. Insured individuals do not have to choose
doctors or hospitals from a specific list of providers. Also called
"fee-for-service" plans.

in-network - describes a provider or health care facility
which is part of a health plan's network. When applicable, insured
individuals usually pay less when using an in-network provider.

lifetime maximum benefit - the maximum amount a health
plan will pay in benefits to an insured individual.

limitations - a restriction on the amount of benefits paid
out for a particular covered expense.

long-term disability (LTD) - insurance which pays
employees a percentage of monthly earnings in the event of
disability.

managed care - the coordination of health care services in
the attempt to produce high quality health care for the lowest
possible cost. Examples are the use of primary care physicians as
gatekeepers in HMO plans and pre-certification of care.

Multiple Employer Trust (MET) - an arrangement created to
obtain health and other benefits for participating employer groups.
Small employers can pool their contributions to receive the
advantages of large group underwriting.

network - a group of doctors, hospitals and other
providers contracted to provide services to insured individuals for
less than their usual fees. Provider networks can cover large
geographic markets and/or a wide range of health care services. If a
health plan uses a preferred provider network, insured individuals
typically pay less for using a network provider.

out-of-network - describes a provider or health care
facility which is not part of a health plan's network. Insured
individuals usually pay more when using an out-of-network provider,
if the plan uses a network.

out-of-pocket maximum - the total of an insured
individual's co-insurance payments and co-payments.

plan administration - overseeing the details and routine
activities of installing and running a health plan, such as
answering questions, enrolling new individuals for coverage, billing
and collecting premiums, etc.

point-of-service (POS) - health plan which allows the
enrollee to choose HMO, PPO or indemnity coverage at the point of
service (time the services are received).

pre-certification - Pre-admission review and approval of
appropriateness and medical necessity of hospitalization or other
medical treatment.

pre-existing condition - an illness, injury or condition
for which the insured individual received medical advice, treatment,
services or supplies; had diagnostic tests done or recommended; had
medicines prescribed or recommended; or had symptoms of typically
within 12 months (time periods may vary depending on state laws)
prior to the effective date of insurance coverage.

Preferred Provider Organization (PPO) - A network or panel
of physicians and hospitals that agrees to discount its normal fees
in exchange for a high volume of patients. The insured individual
can choose from among the physicians on the panel.

premiums - payments to an insurance company providing
coverage.

provider - any person or entity providing health care
services, including hospitals, physicians, home health agencies and
nursing homes. Usually licensed by the state.

referral ­ within many managed care plans, transfer to
specialty physician or specialty care by a primary care physician.

rider - a modification to a Certificate of Insurance
policy regarding clauses and provisions of a policy. A rider usually adds
or excludes coverage.

risk - uncertainty of financial loss.

short-term medical - temporary health coverage for an
individual for a short period of time, usually from 30 days to six
months.

small employer group - groups with 1 ­ 99 employees. The
definition of small employer group may vary between states.

stop-loss - the dollar amount of claims filed for eligible
expenses at which the insurance begins to pay at 100% per insured
individual. Stop-loss is reached when an insured individual has paid
the deductible and reached the out-of-pocket maximum amount of
co-insurance.

Third Party Administrator (TPA) - An organization
responsible for marketing and administering small group and
individual health plans. This includes collecting premiums, paying
claims, providing administrative services and promoting products.